Chodos v. West Publishing Company, Inc.

292 F.3d 992 (9th Cir. 2002)

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Nature of the Case

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Facts

Prior to being admitted to the bar in 1977, Chodos (P) worked as a software engineer. Beginning in approximately 1989, P began developing the idea of writing a treatise on the law of fiduciary duty that included a traditional print component as well as an electronic component that incorporated search engines, linking capabilities, and electronic indexing. In early 1995, P sent a detailed proposal, which included a tentative table of contents, to the Bancroft-Whitney Corporation. In July 1995, Bancroft and P entered into an Author Agreement, which both parties agree is a standard form contract used to govern the composition of a literary work for hire. The Agreement provided for no payments to P prior to publication, and a 15% share of the gross revenues from sales of the work. P was informed that a typical successful title published by Bancroft grossed $1 million over a five-year period, but that was no guarantee. P sought publication of the work not only for the direct financial rewards but also for the enhanced professional reputation he might receive from the publication of a treatise, which in turn might result in additional referrals to his practice and increased fees for him. From July 1995 through June 1998, P’s principal professional activity was the writing of the treatise. P estimates that he spent at least 3600 hours over the course of three years on writing the treatise and developing the accompanying electronic materials. As P completed each of the chapters, he submitted them to Bancroft on a CD-ROM; the seventh and final chapter was sent to the publisher in February 1998. When finished, the book consisted of 1247 pages. Bancroft-Whitney was purchased by the West Publishing Group (D), and the two entities merged at the end of the year. In the summer of 1998, the D editors provided him with detailed notes and suggestions, to which he diligently responded. In November 1998, D again sent P a lengthy letter including substantive editorial suggestions related to the organization of the book. In early December 1998, D sent P yet another letter, this time apologizing for delays in publication, and assuring him that publication would take place in the first quarter of 1999. On February 4, 1999, P was informed that D had decided not to publish the book because it did not “fit within [West’s] current product mix” and because of concerns about its “market potential.” D admits, that the manuscript was of “high quality” and that its decision was not due to any literary shortcomings in P’s work. P filed an action for breach of contract. D removed the case to federal court on the basis of diversity jurisdiction. D immediately moved for summary judgment, which was denied. P amended his complaint to seek restitution on a quantum meruit basis and dropped the breach of contract claim. D moved to dismiss the amended complaint for failure to state a claim, and the motion was denied. At the conclusion of discovery, D moved for summary judgment, and P sought to amend the complaint again, in order to add a claim for fraud. The district court granted D’s motion and entered judgment in its favor; it simultaneously denied P leave to amend his complaint. This appeal resulted.